🇯🇵Japan has just experienced the largest weekly stock outflow in its history, with investors pulling out $11.8 billion 🏃♂️💰 from equities, according to Bank of America. The exodus follows a surge in long-term government bond yields 📈, driven by rising fears over Japan’s growing fiscal deficit 📊⚠️.
Globally, equity markets saw $9.5 billion in outflows 🌍, including $5.1 billion from U.S. stocks 🇺🇸, while European equities gained $1 billion 🇪🇺 — highlighting Japan’s unique struggle with record-breaking capital flight 🚨.
📉 Bond Yields Skyrocket as Demand Evaporates
🔹 40-year bond yields hit a record 3.689%, later easing to 3.318%
🔹 30-year yields jumped 60+ bps to 2.914%
🔹 Demand for 40-year bonds fell to the lowest since July 2023
With traditional buyers like life insurers already meeting quotas ✅ and the Bank of Japan pulling back from bond purchases 🏦, yields are soaring — rattling investors worldwide 🌐💥.
💱 Yen Carry Trade Unwinds
The surge in yields is shaking up the yen carry trade — a strategy where traders borrow yen 🪙 at low rates to invest in higher-yield assets abroad. But as the yen strengthens (up 8% since January 📈), that trade is now unraveling fast ⚠️.
Experts warn this could be worse than the August 2024 unwind 😬. With capital rushing back to Japan 🇯🇵 and global liquidity tightening, markets are on edge.
🌎 Global Shockwaves
With $3.7 trillion in net external assets 💼, Japan’s money matters globally. If a portion of it returns home, it could:
💥 Trigger a "financial market Armageddon" (Societe Generale)
📉 Slash global growth to 1% (Quantum Strategy)
❌ End the belief that U.S. is the safest bet for investors
Strategist David Roche warns that tightening liquidity could stretch the bear market further 🐻🔻 and reshape global investing dynamics permanently.
💬 Bottom Line: Japan's bond crisis is no longer local — it's shaking global markets. As capital shifts and confidence wavers, the financial world braces for a volatile new chapter 📉🌪️.